Weekly Commentary – May 4th

Futures Commentary-

Wheat catapulted higher this week gaining 48 cents a bushel, while corn and beans both managed double-digit gains advancing 12 and 13 cents respectively.

The Kansas Wheat Quality Council crop tour pegged the crop there at 37 bushels per acre and state-wide production of 243 MB vs last year’s crop of 334 MB. If realized, that would be the lowest production since 1989. In Oklahoma, a similar crop tour produced an estimated yield of 25.6 with a 63.3 MB crop vs last year’s 98.6 MB crop. While the crop is certainly suffering from drought conditions, it is behind in terms of development so rains could prove beneficial. The latest GFS model has some rain potential in key growing areas in KS on May 12 with an inch or more of rain projected.

In terms of the rest of the US, parts of IA/MN/WI saw 1 to 2 inches of rain in the last day likely slowing planting. After this storm blows through, IA should see 4 days of no rain into mid next week and temps in the 70s this weekend. Temps in ND/SD/MN should be trending warmer than normal in the next 5 days helping kick start planting where no planting had taken place as of USDA’s latest report on Monday. US corn planting was at 17% planting below 24% normally for this time of year.

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Corn continued to find support this week from dry weather in key growing areas of Brazil for the 2nd season corn crop. Rains in March and early April stalled soybean harvest which meant some of the corn was planted late. Hardly any rains have fallen since early April. This week FC Stone lowered their Brazil corn crop estimate to 83.9 MMT from their previous forecast of 86.5 MMT. That is well below USDA’s estimates at 92.0 MMT. Cumulative precipitation in key growing areas has been well below normal with virtually no rain since mid-April. The 14-day forecast only shows a modest hint of precipitation for Parana on May 13 & 18, but the reliability of that forecast seems questionable as Brazil enters their historically dry season. Total precipitation from April thru May 18 is 65% below normal in Mato Grasso do Sul and Parana, key production areas for the 2nd season corn crop.

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